New Year's Message

Itaru Koeda, Chairman

Happy New Year to all.

In 2004 Japan's economy showed a steady recovery owing to rises
in production, exports and corporate earnings in the first half of the
year. However, the latter half of the year was marred by unease over a
number of trends including rising crude oil prices, the depreciating dollar
and a stagnant stock market. There is still considerable concern with respect
to the future course of the national economy.

Domestic demand for passenger cars and commercial vehicles reached a total
of 5.83 million units last year, driven by aggressive new model launches
among other factors. This is about the same level as in 2003, which saw
market growth for the first time in three years. Motorcycle sales, meanwhile,
declined 8.7% to 727,000 units.

With the sound economic trends that are anticipated in 2005 in the United
States and Asia and the positive growth forecast for the Japanese economy,
passenger car and CV sales should rise to 5.87 million units, while motorcycle
demand is expected to drop to 712,000 units. Overall, the business climate
for the automobile industry remains challenging, particularly in view of
the uncertainty regarding crude oil prices and currency fluctuations.

The Japanese automobile industry occupies a core position in the national
economy, and as such has a major role to play in contributing to social
and economic welfare. Market activation is of course one of its key concerns.

Road safety and environmental protection are top-priority social issues
for the industry. Last spring Japan's automakers officially launched
their "Working Towards a Sound Automotive Future" initiative,
focusing on efforts to increase road safety as well as improve air quality
and curb global warming in order to minimize the environmental impact of
motor vehicles.

JAMA will actively contribute to the achievement of the Japanese government's
target-announced in January 2003-to reduce road traffic fatalities
by 50% over the next ten years. In addition to introducing advanced vehicle
safety measures and promoting greater road safety awareness on the part
of the public, the automobile industry is also contributing to the creation
of an infrastructure that will integrate roads, road users and vehicles
through the effective use of ITS (Intelligent Transport Systems) technologies.

Global warming and air quality are also being addressed. In response to
the need to reduce CO2 emissions, the Japanese automobile industry is working
hard to achieve further increases in fuel economy and to promote improved
fuel quality, more efficient goods distribution and smoother traffic flow.
With respect to air quality, automakers continue to develop and encourage
the practical use of a wide range of clean-energy (including fuel-cell)
vehicles and are making strenuous efforts to ensure compliance with new
exhaust emission regulations for both diesel and gasoline-powered vehicles.

Japan has long promoted resource conservation and waste reduction, and
over the years automobile manufacturers have made significant advances
in these two areas. This month sees the enforcement of Japan's Automobile
Recycling Law, in preparation for which comprehensive groundwork was carried
out jointly by government and the private sector. While vehicle users will
be required to share the cost burden involved, automakers will make every
effort to ensure optimal efficiency in the operation of the recycling infrastructure.
A continuing, parallel effort will be the design and development of vehicles
that are easier to recycle.

In view of their ever-expanding global operations, automakers must operate
in today's international business environment with maximum effectiveness
and responsibility. For the benefits they will bring to the industry and
to consumers alike, JAMA welcomes the establishment of free-trade areas
(FTAs) that complement WTO initiatives towards multilateral free-trade
and investment agreements. In the wake of the FTAs launched with Singapore,
Mexico, and the Philippines, the Japanese automobile industry will continue
to promote liberalization through the creation of additional FTA treaties
with, for example, Thailand, Malaysia, and Korea.

Two special events are on JAMA's calendar this year: First, the
opening of "Expo 2005 Aichi" in March featuring JAMA's
Wonder Wheel Pavilion, the first world-expo pavilion ever to integrate
a 50 meter-class Ferris wheel in its design. Second, in October, the 39th
Tokyo Motor Show for Passenger Cars & Motorcycles which will once again
feature hands-on, interactive displays for visitors. Plans are also being
made to mark this year's 50th anniversary of the Tokyo Motor Show.

The Japanese automobile industry always seeks to better serve society
and vehicle users by delivering products that can be operated in safety
and security. By the same token, it seeks to prevent any recurrence of
product defects and to ensure that recall operations are properly implemented,
and it is working with government to meet those objectives.

JAMA also systematically petitions the authorities for a reduction of
the tax burden on vehicle users and a streamlining of Japan's complex
automotive tax structure. In addition to specific requests for auto tax
reform, JAMA regularly submits to the Japanese government proposals targeting
the most effective use of tax revenue in the maintenance of the nation's
road infrastructure.

I take this opportunity to thank all our friends and colleagues for their
continued support in advancing the activities of the automobile industry.